The total credit card market in the country is now at around 17m cards and is
growing at a rate of 30-35per cent per annum. The size of the Indian credit
cards market is estimated to be around $4bn.
The market is expected to grow by about 30-35% p.a. This would still be a
very low penetration of a potential market of 60 million cardholders. The
credit card business is a low-margin, high volume business. Thus, given the
low income per card and the high initial investments by the bank, large

volumes in terms of cards issued and the transactions financed are required

to make the operations profitable.

Credit cards are gaining ground in India at a rapid pace with increasing
urbanization and awareness of plastic money. Besides the various freebies
and rewards doled out, customers feel it very convenient to carry a plastic
card rather than bundles of currency. The expected growth rate of credit card
business in India is 30-35%. With the advent of globalization and
privatization, the concept of credit cards is gaining popularity. Most of the
bill payments including utility payments can be taken care by credit cards.
Further, in India at least, people perceive the card as a status symbol.

In India, ICICI Bank, Citibank, HDFC Bank, SBI, StanChart and HSBC are
the main players. However, various Indian banks, both public and private,
are entering into Joint Ventures. Recently, BOBCARDS has launched a
credit card, PARAS, in association with the MasterCard International. ICICI
Bank is the largest card issuer in the country with the total of 4 mn cards
issued. As the corporate banking margins are falling, the banks are focusing
more on the retail segment. SBI and ICICI are capturing the market at a very
fast pace.

The main service providers to credit cards issuers are MasterCard and Visa.

They are typically paid 0.025% of the transaction by the issuing bank.

MasterCard \u2013 MasterCard is a product of MasterCard International and
along with VISA are distributed by financial institutions around the world.
Cardholders borrow money against a line of credit and pay it back with
interest if the balance is carried over from month to month. Its products are
issued by 23,000 financial institutions in 220 countries and territories. In
1998, it had almost 700 million cards in circulation, whose users spent $650
billion in more than 16.2 million locations.

VISA Card \u2013 VISA cards is a product of VISA USA and along with
MasterCard is distributed by financial institutions around the world. A VISA
cardholder borrows money against a credit line and repays the money with
interest if the balance is carried over from month to month in a revolving
line of credit. Nearly 600 million cards carry one of the VISA brands and
more than 14 million locations accept VISA cards. Apart from Master and
Visa there are few more service providers like American Express, Discover
and Diner etc.